I Can’t Get a Car Loan Because of a Past Bankruptcy – April

My husand over 10 years ago got appendicitis with no insurance. The hospital wasn’t happy with the small payments hubby was making, so they hired a law firm. The lawyer for the hospital wanted him to start paying $170 a week when he was only making like $260 a week in a factory. Hubby had no choice but to file bankrupcy because the lawyer won a suit to start garnishment.

Well its been almost 10 years, and the bankrupcy is suppose to fall off his credit report Feb 2009 (it says that on the credit report). My hubby is currently deployed and my car died about 2 months after he left. I can’t obtain a car loan until the bankrupcy falls off (so the banks say). I’m hoping to get a car really soon since I have no transportation and we have 2 children. Any insight would be wonderful.

Is there a specific day that the bureaus take these off of the credit reports? If not is it a general time frame like the beginning, middle, or end of a month? How is the credit report affected ater it falls off?

April”

Dear April,

I know car lenders really tightened their standards recently but wow, waiting for the decade old bankruptcy to fall off the credit report seems very extreme.

You have a couple of options. The first is a story I saw recently that might be able to help you. As a result of GMAC getting government aid to help bail them out they were requested to loosen their lending standards to help people that otherwise could not get a vehicle.

General Motors Corp and its financing affiliate GMAC on Tuesday announced programs to make it easier for car and truck buyers to get financing, a day after GMAC agreed to sell the government a $5 billion stake.

Through Jan. 5, GM will offer interest rates of zero percent to 4.9 percent on loans of up to five years on various 2008 model year vehicles, and 3.9 percent to 5.9 percent on some 2009 vehicles. Many of the vehicles also carry cash discounts of $500 to $4,250.

The move is a bid to capitalize on GMAC’s separate plan to provide auto financing to more U.S. consumers. GMAC will extend loans to retail buyers with credit scores of 621 or higher. In October it had restricted loans to borrowers with scores of 700 or higher.

Many analysts consider borrowers with credit scores of 620 or lower to be “subprime.” Dealer wholesale financing is unchanged, GMAC said.

Mark LaNeve, GM’s sales and marketing chief, said the lower financing costs will encourage customers to “get back into the game.”

The second option would be for you to go to one of the local buy here, pay here lots. You’ll pay more for the vehicle but you are more likely to get one there than at a traditional lender.

If you want to check your credit score before you head out to a GM dealer or another dealer, just use this credit score link.